Rising costs

Nasik Swami
Sunday, March 12, 2017

IF incomes do not keep pace with inflation, households will increasingly find cost of living going up.

Economist Neelesh Gounder of the University of the South Pacific said this while explaining the uniform feedback from the February Tebbutt Times Poll showing cost of living and employment to be the two major national issues.

The cost of living was ranked the number one issue by 46 per cent of those polled and employment ranked second by 32 per cent of respondents.

Particularly noting the consumer price index (CPI) frequently used to measure changes in cost of living between 2012 and last year, had increased by about 12 per cent, which Mr Gounder said averaged about 2.4 per cent a year.

However, he noted that during the same period, the cost of food and non-alcoholic beverages, one of the most common components in household budgets, increased by about 20 per cent.

"So, these types of changes faced by households could be reflected in 46 per cent of those polled choosing cost of living as the main issue," Mr Gounder said.

"Has income kept pace with changes in cost of living? In few sectors, it has. Unfortunately, the story is not the same for the majority of the economically-active population.

"The bargaining power of workers and trade unions has seen a significant decline in sectors such as banking, aviation, telecommunications and municipal councils since 2011 due to the Essential National Industries Act.

"Many trade unions have been unable to file claims since then. As a result, several sectors have seen no changes in wages and salaries since 2011. While trade unions are now beginning to make claims, there will be a lag and one summer is unlikely to make a swallow."

Mr Gounder said the non-unionised sectors such as the informal employment or household enterprises engaged in agricultural (dalo, sugar cane, fisherwomen, roots crops and mixed crops) and related activities also needed to be considered.

Then there are domestic workers (including family/no pay), security officers, drivers and related unskilled workers where low wages have remained almost stagnant, he said.

On the second issue, Mr Gounder said while the estimated unemployment rate in 2014 was 6.2 per cent, overall, it had remained around 6 per cent during the last decade.

For youths aged 15-24, unemployment rate was estimated at 18.2 per cent in 2014, he said.

And he referenced the International Labour Organisation 2015 report that noted around 40 per cent working youths were in a job that did not match their educational qualifications.

In March 2014, Mr Gounder said the National Employment Centre reported that the number of unemployed registered with them was 30,000, out of which more than 1000 were degree holders and 11,000 had some form of tertiary qualification.

"On average, unemployment rates have persisted around 6 per cent during the last decade.

"Slow recovery immediately following the 2006 coup and quality as well as disparities in growth have been a major hindrance in creating more jobs.

"There are disparities in economic growth between rural/urban areas, between regions and between sectors. Most of the jobs created (around 70-80 per cent) are expected to come from the services sector.

"Therefore, mismatch of skill/qualifications is becoming a key issue in unemployment."